Managing Editor, MoneyMixTM
The number of individuals filing for bankruptcy is on the rise here in the U.S. and many are among our nation's youngest.
"When I was 18 I had to file bankruptcy because I had maxed out all of my credit cards..."
-Stephanie, MO
Compared to the same period in 2008, bankruptcy filings have increased 33% in the first quarter of fiscal year 2009. (uscourts.gov Mar. 5th, 2009). While bankruptcies are filed by people of all ages, over 25% of those filing for bankruptcy are between the ages of 18 and 34 since 1991, according to a recent report from the AARP. (AARP: Generations of Struggle June, 2008).
Stephanie from Missouri is one example. "When I was 18 I had to file bankruptcy because I had maxed out all of my credit cards from going to college full time to working full time and taking care of my son"(Home & Family Finance Resource Center).So what can young adults, and members of all age groups, do to prevent bankruptcy from entering the equation? Here are a few tips to help prevent you from having to file for bankruptcy:
- Chop credit card spending. Stop using credit cards to purchase anything. Pay with cash or with your debit/check card. Make sure you keep track of what you spend using your debit/check cards by writing down amounts you spend, or keep receipts. That way you can make sure you aren't withdrawing more money than you have in your account.
- Trim discretionary spending. Identify which monthly expenses aren't necessary for you to survive. Look for ways to trim those discretionary expenses. For example, replace going out to dinner with renting a movie, cancel magazine subscriptions, and consider removing cable TV.
- Snip mandatory expenses. Find ways to cut down on those expenses you have to pay in order to survive. Unplugging electronics like TVs and gaming systems, turning off lights when you aren't using them, keeping your thermostat at a steady temperature around 68 degrees, combining trips to save on gas, and buying generic items instead of brand name goods at the grocery store are all ways to reduce the cost of mandatory expenses.
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